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Can Export Taxation Counter Monopsony Power?

Author

Listed:
  • Alan Deardorff

    (University of Michigan)

  • Indira Rajaraman

    (National Institute of Public Finance and Policy)

Abstract

This paper explores the implications for trade policy of buyer concentration in markets for primary commodity exports of developing countries. Simple partial equilibrium models of monopsony and oligopsony show that the best available policy for the exporting country may be to tax exports so as to extract some of the profits of the monopsonist, even though doing so actually worsens the distortion caused by the buyer’s market power. The paper also explores the general equilibrium implications of these results for factor markets and for patterns of trade.

Suggested Citation

  • Alan Deardorff & Indira Rajaraman, 2005. "Can Export Taxation Counter Monopsony Power?," Working Papers 541, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:541
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    File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers526-550/r541.pdf
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    Citations

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    Cited by:

    1. Bouët, Antoine & Laborde Debucquet, David, 2017. "Food crisis and export taxation: The cost of noncooperative trade policies:," IFPRI book chapters, in: Bouët, Antoine & Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 12, International Food Policy Research Institute (IFPRI).
    2. Antoine Bouët & Carmen Estrades & David Laborde, 2014. "Differential Export Taxes along the Oilseeds Value Chain: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(3), pages 924-938.
    3. Mr. Alexei P Kireyev, 2010. "Export Tax and Pricing Power: Two Hypotheses on the Cocoa Market in Côte d’Ivoire," IMF Working Papers 2010/269, International Monetary Fund.
    4. Olga Solleder, 2013. "Panel Export Taxes (PET) Dataset: New Data on Export Tax Rates," IHEID Working Papers 07-2013, Economics Section, The Graduate Institute of International Studies.
    5. Bouet, Antoine & Laborde Debucquet, David, 2010. "Economics of export taxation in a context of food crisis," IFPRI discussion papers 994, International Food Policy Research Institute (IFPRI).

    More about this item

    Keywords

    commodity exports; monopsony; oligopsony; optimal export tax;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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